Tag Archives: DC Court of Appeals

Federal Court Deals Potentially-Fatal Blow to Obamacare

“But we have to pass the bill so that you can find out what is in it…” Nancy Pelosi’s famous Obamacare gaffe comes to mind today as Politico is reporting that a sloppy error in the language of the Affordable Care Act has brought it to the brink of collapse. While hearing the case Halbig v. Burwell, the United States Court of Appeals for the District of Columbia Circuit ruled that section 36B of the Affordable Care Act only allows the federal government to subsidize healthcare plans for individuals living in states which created state-run healthcare exchanges.

If this 2-1 ruling stands, only those individuals who live in the 14 states that established their own healthcare exchanges would qualify for subsidies aimed at reducing exploding health insurance premiums. Those who live in the other 36 states that either could not or would not create their own exchanges would not qualify for subsidies for plans purchased through Healthcare.gov. Since both the individual mandate and the employer mandate are tied to those subsidies via the language of the law, individuals and businesses in those 36 states would no longer be bound by the mandate.

The New York Times estimates that this ruling could cancel benefits for up to 4.5 million people who are already expecting them. Politico published an estimate that put the number of those who would no longer be given benefits at 7.3 million by 2016.

At issue in the case were the mandates in the Affordable Care Act. A group of individuals and businesses from states without state-run exchanges, unable to deal with the costs of the upcoming health insurance mandates that require employers with over 50 employees to provide insurance for workers and require individuals to purchase insurance plans for themselves, filed suit. They claimed that, since section 36B in the law does not allow the federal government to subsidize health insurance premiums for people in states without state-run exchanges, the employer and individual mandates, which are tied legally to those benefits, do not apply to them. Since the individuals in the case could not afford health insurance even with the subsidies, the lawsuit was necessary in order for them to acquire a hardship waiver exempting them from the individual mandate.

The New York Times quoted David Klemencic, one of the business owners who filed suit, as saying, “If I have to start paying out for health insurance, it will put me out of business. As Americans, we should be able to make our own decisions in matters like this.”

If fewer people end up receiving subsidies to offset premiums that are already exploding due to regulations in the Affordable Care Act, that would mean fewer enrollees, both by way of inability to pay and inability of the government to mandate them to pay, which could cause a death spiral, pushing premiums through the roof for those who are purchasing plans through exchanges.

Other courts, including the Fourth Circuit Court of Appeals, have ruled the other way on this issue in other lawsuits, meaning the law is not quite yet settled and the subsidies are not yet being canceled. The Department of Justice is likely to pursue an appeal, which would come in the form of an “en banc” ruling by the entire 11-member DC Court of Appeals, which is made up of seven Democrats and four Republicans. It is also possible that this case could end up before the Supreme Court. The DC Court of Appeals’ decision, if it stands, would effectively eviscerate Obamacare’s mandates and subsidies in a majority of US states.

Despite the fact that a fundamental error in the Affordable Care Act’s language may just have disrupted the US health insurance market, the Obama administration is spiking the football and declaring victory. Said White House Press Secretary Josh Earnest, “There are four different cases making this point that are working their way through the federal court system. Two of them have been dismissed at the district court level, and two of them are awaiting their initial rulings. This of course is the appeal of one of those cases… For those who are keeping score, we’re still ahead 2 to 1 here.”